Home Loan Process
Getting a loan for a home can sometimes feel like a daunting task. After all, most people will only get a mortgage a few times in their entire lives.
First-time homebuyers may have lots of questions, especially early in the process. However, even if you’ve gotten a mortgage before, changes in program guidelines & technology impact how we go about helping borrowers get the best loan for their individual needs.
Today’s technology allows us to do things we never thought possible. However, when it comes to getting a home loan, nothing beats an initial consultation with an experienced loan officer to make sure you’re on the right path.
Here is an overview of the 9-step process to get a home loan with us:
- Find a loan officer in a branch near you
- Schedule an initial consultation
- Get Pre-Qualified
- Find the perfect home and negotiate a contract to purchase
- Apply for your mortgage loan
- Begin collecting the required paperwork
- Finalize your application and lock your interest rate
- Organize your cash needed for closing
- Schedule your closing!
The loan process changes a bit depending on whether you are buying or refinancing a home as well as which loan program you’re pursuing.
When applying for a mortgage, your mortgage lender will need to determine your credit score.
The lender will request a credit score from all three bureaus; Equifax, Experian, and TransUnion, through a credit reporting company. The credit reporting company then compiles a credit report for the lender, which includes a numerical score - usually called a credit score.
Your credit score greatly impacts your home loan options.
Tips that may help you maintain a good credit score:
- Make all payments on time.
- Try to avoid applying for new credit unless necessary. When opening a new line of credit or credit account, a new inquiry will be added to your credit report. This could cause your score to drop.
- Do not “max out” your credit accounts. It is ideal to keep a balance of 40% or less of the maximum credit limit.
Since the factors that make up a credit score are constantly fluctuating, a score can change frequently. That’s why it’s important to speak to a loan officer early in the process to confirm your credit score and address any potential issues with your credit report.
Qualifying & Income Calculations
Once you have identified your credit score and addressed any credit issues, it’s time to evaluate what you can afford.
Your mortgage payment consists of the principal and interest for the loan plus any property taxes, insurance and homeowners association dues (if applicable).
Our loan officers will help you calculate your income and look at your debt structure to determine what’s called a debt to income ratio.
When you fill out your initial pre-qualification application you will be asked for your employment history, monthly income, source of funds for closing and down payment and other pertinent information.
Your pre-qualification will be based solely on your pre-qualification information. Once you have found a property and made a formal application, the items outlined below will be required.
Verification of Income
In order to verify your income, the lender may ask for the following (not an all-inclusive list):
- Most recent pay stubs
- Most recent two years W2’s
- Most recent two years complete income tax returns
- Verification of Employment and Income from the employer (this will be requested from the employer by the lender)
Please note that additional information may be requested as part of the loan application process.
Once we have determined your debt to income ratio, your loan officer will let you know what payment range you may qualify for when looking at homes.
Down Payments & Verification of Funds to Close
Another important part of the mortgage loan process is determining how much money you have available to close and what may be required for a given loan program.
All funds needed to complete the loan request will need to be verified. In order to validate the assets available for the transaction, any of the following may be required:
- Most recent bank or investment company statements.
- Gift Information
- Verification of funds sent directly to your bank/investment company by the lender
- 401k or other retirement statements
Talk to your loan officer to get an idea of what type of cash you may need to close based on the different loan programs available as well as your credit and income scenarios.
Purchasing a Home
We believe in the power of homeownership! Our team is here to provide guidance on where to start as well as help you understand your options for buying a home, every step of the way.
1st Time Homebuyers
Making the decision to jump into homeownership is an exciting one! We have programs that will help make the dream of homeownership a reality for you!
We KNOW you have questions. That’s why we strive to be ready with as many answers as it takes for you to become comfortable with the overall process and your loan options.
We have a number of loan programs designed specifically for first-time homebuyers that include low or no down payment and flexible credit and income guidelines.
Find a loan officer near you to start the process today.
More Purchase Loan Options
- Primary residence
- 2nd Home
- Investment Property
- Renovation Loans
- One Time Construction - Close
Our Home Loan Programs Include:
- Fixed & Adjustable Rate Mortgages
- One Time Construction - Close
Before shopping around for your dream home, it is important to become Pre-Qualified whether you’re a first-time homebuyer or an experienced homeowner.
Once this step is finalized, you will have a clear understanding of the purchase price range you should begin shopping for. This key step ensures that your time and efforts are put towards focusing on the end goal – Homeownership!
Once you are Pre-Qualified our loan officer will give you a clear set of follow up items which will be needed after you have formally made application, these items may include:
- Documents needed (income, bank statements, etc.)
- Cash needed to close
- Appraisal & title company considerations
- Key items your real estate agent may need
- Scheduling a closing date
When purchasing a home, it is always a good idea to consider a professional home inspection. A home inspection can reveal minor to major repairs that you may not recognize on your own by evaluating the home’s exterior, the systems within the home and more.
Benefits of a Home Inspection Include:
No Surprises. A home inspection should identify defects prior to taking ownership. This enables the homebuyer to negotiate repairs or price adjustments within the contract prior to closing. This helps to minimize possible unpleasant surprises and unexpected costs for repairs after you purchase your home.
Full Examination. A professional home inspector will review the structure of the home including the roof, attic, walls, ceiling, floors, windows, doors and foundation, as well as the furnace/air conditioning systems, interior plumbing and electrical systems.
Let A Pro Do It. Even the most experienced homeowner lacks the knowledge and expertise of a professional home inspector who has inspected hundreds, perhaps thousands of homes. An inspector is familiar with the elements of home construction, their proper installation and maintenance.
What kind of inspections/test should I have done?
It is important to learn as much about the home and its components as possible. Some of the inspections are required and some are recommended. The cost of the inspections/test can often be negotiated in the purchase agreement for the seller to pay.
- Termite Inspection. This inspection may be required. If the inspection determines the home does have termites, the seller of the home may be responsible for having the home treated prior to closing.
- Lead Based Paint. This inspection is only mandatory on FHA and VA loans and only pertains to homes that were built before 1978.
- Radon Gas. This is an optional inspection but highly recommended. Radon gas is a colorless, odorless, radioactive gas that is released from the ground that can enter a home through a cracked foundation or by contaminating the water supply. If you smoke and your home has high radon levels, your risk of lung cancer is especially high.
- Asbestos. This is an optional inspection recommended for older homes, especially if you plan on renovating. Asbestos may be harmful if airborne.
The cost of these inspections and tests will vary depending on the house size, age and possible additional services. Nonetheless, most homeowners will tell you that a home inspection is money well spent.
Refinancing a Home
There are many great reasons to consider refinancing your home including:
- Lowering the rate on your mortgage
- Going from an adjustable rate to a fixed rate
- Changing the repayment terms
- Obtaining cash out
Under most circumstances, some equity in the home is required in order to refinance. The amount of equity required, if any, depends on the loan program you qualify for.
Speak to a loan officer near you to discuss your motivation for refinancing and we’ll help you understand your options and potential rate and payment scenarios.
Then, you can decide if refinancing makes the most sense for you!
An appraisal will be required on most transactions to determine the current fair market value of the property. Appraisals are ordered from a panel of local licensed independent appraisers.
The type and scope of the appraisal will vary based on the loan program. The fee for the appraisal is typically paid during closing.
A title search must be performed on the property as part of the closing process. This search will reveal the legal description, the owner of record and any outstanding liens and/or encumbrances on the property. Liens are items such as property taxes, mortgage loans and judgments. Encumbrances may be road maintenance agreements, right of way and utility easements.
Your loan officer can recommend several local title companies to close your transaction.